Affordable method Setting the promotion budget at the level management thinks

Affordable method setting the promotion budget at the

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Affordable method:Setting the promotion budget at the level management thinks the company can afford.Percentage-of-sales method:Setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price.Stronger brands with higher sales can afford the biggest ad budgets- the percentage-of-sales budget is based on the availability of funds rather than on opportunities and it may prevent the increased spending sometimes needed to turn around falling sales. Competitive-parity method:Setting the promotion budget to match competitors’ outlays.There are no grounds for believing that the competition has a better idea of what a company should be spending on promotion than does the company itself. Companies differ greatly, and each has its own special promotion needs.Objective-and-task method:Developing the promotion budget by (1) defining specific promotion objectives, (2) determining the tasks needed to achieve these objectives, and (3) estimating the costs ofperforming these tasks. The sum of these costs is the proposed promotion budget. (The Most Logical Method out of them all)Beyond its reach, large-scale advertising says something positive about the seller’s size, popularity, and success.Consumers tend to view advertised products as more legitimate. Advertising is also very expressive; it allows the company to dramatize its products through the artful use of visuals, print, sound, and colour.Advertisingcan carry on only a one-way communication with an audience, and the audience does not feel that it has to pay attention or respond.Personal sellingis the most effective tool at certain stages of the buying process, particularly in buildingup buyers’ preferences, convictions, and actions; these unique qualities come at a cost, however. A sales force requires a longer-term commitment than does advertisingSales promotionincludes a wide assortment of tools—coupons, contests, cents-off deals, premiums, and others—all of which have many unique qualities. They attract consumer attention, offer strong incentives to purchase, and can be used to dramatize product offers and boost sagging sales.
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Marketers tend to underuse PRor use it as an afterthought. Yet a well-thought-out PR campaign used with other promotion mix elements can be very effective and economical.Direct marketingis interactive: It allows a dialogue between the marketing team and the consumer, and messages can be altered depending on the consumer’s response. Thus, direct marketing is well suited to highly targeted marketing efforts and building one-to-one customer relationships.Marketers can choose from two basic promotion mix strategies: push promotionor pull promotion.
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